Wednesday, March 30, 2011

Not content with the ruling last Friday by the International Trade Commision that freed Apple of any wrong-doing in alleged patent infringement, the Espoo, Finland-based cellphone giant has filed a new complaint with the ITC. This time, they’ve broadened the scope to include new patents not previously mentioned, alleging that Apple is infringing intellectual property in virtually all Nokia products. In a statement issued via Thomson Reuters One, Nokia mentions seven new patents used in virtually all of its mobile phones, portable music players, tablets and computers:

The seven Nokia patents in the new complaint relate to Nokia’s pioneering innovations that are now being used by Apple to create key features in its products in the areas of multi-tasking operating systems, data synchronization, positioning, call quality and the use of Bluetooth accessories.The two ITC complaints and patent cases filed in the US, Germany, UK and the Netherlands bring the number of Nokia patents Apple’s been alledgely infringing to 46, many of which “filed more than 10 years before Apple made its first iPhone,” according to Nokia’s IP chief Paul Melin. He didn’t stop there, though.

“Apple must stop building its products using Nokia’s proprietary innovation,” he added. Curious that Nokia is only now making a lot of noise when the iPhone accounts for half the smartphone market’s profits. Why didn’t they sue when the original iPhone came out? Back then, Nokia executives were full of it, ridiculing Apple’s handset and boasting how they ship more phones a day than iPhones in a quarter.

Following last Monday’s news of AT&T’s $39 billion acquisition of T-Mobile USA that sent Sprint Nextel’s stock down 15 percent, the carrier is now officially opposing the deal which is pending federal review by the FCC and Department of Justice, which could take at least a year. A statement Sprint put out yesterday mentions duopoly and voices concerns for consumers and competition, urging the government “to block this anti-competitive acquisition”.

A duopoly created would threaten Sprint’s existence, the statement argues. Revenue-wise, the combined company would be three times the size of Sprint, it reads. Sprint warns the transaction “will likely spark a host of hearings in the US Congress,” adding:

AT&T and Verizon are already by far the largest wireless providers. If approved, the proposed acquisition would create a combined company that would be almost three times the size of Sprint in terms of wireless revenue and would entrench AT&T’s and Verizon’s duopoly control over the wireless market. The wireless industry moving forward would be dominated overwhelmingly by two vertically integrated companies with unprecedented control over the U.S. wireless post-paid market, as well as the availability and price of key inputs, such as backhaul and access needed by other wireless companies to compete.

Sprint is the third largest wireless carrier in the country, behind AT&T and Verizon Wireless. Interestingly how those super-profitable carriers that rake in billions of dollars raise their head when their interests are jeopardized, but keep mum when consumers are really being taken advantage of with pricey tariffs and fine print.

For a company of Apple’s stature that relies on awide array of Asian suppliers to ship millions of gadgets to the market every month, I’ve always felt even the smallest disruption in supply chain could spell trouble. The March 11 disaster that struck Japan has affected a lot of firms that make electronics components like memory chips and touch panels.

Apple reduces risks by working with multiple suppliers, but it still depends on the weakest supplier. According to the Wall Street Journal, shortages of lithium-ion batteries for iPods are ahead because Kureha, a polymer provider for lithium-ion batteries, had to reduce output of this chemical after shutting its Japan plant, writes author Mariko Sanchanta:

“A representative from Apple Inc. recently called Kureha Corp.’s offices in the U.S. The problem: Apple was facing tight supplies of lithium-ion batteries used in its popular iPods, and they traced the supply bottleneck to the relatively obscure Japanese chemicals maker.”

It’s entirely possible this hiccup might provoke an alarming scarcity of iPod batteries that could lead to product shortages in stores. It’s affecting other mobile products that use lithium-ion batteries, including iPhones. Supply issues, natural disasters and political unrest are all cited as substantial risk factors in Apple’s filings with the Security and Exchange Commission. Good thing they’ve got operations wizard Timothy Cook on board.

When Steve Jobs returned to Apple, he brought Timothy Cook who reduced Apple’s inventory from months to weeks, even days. Prior to joining Apple, this spreadsheet wizard had served as Compaq’s vice president of corporate materials responsible for procuring and managing all of their product inventory.

Apple’s move to the just-in-time supply chain provided a much-needed financial relief, increased efficiency and product profitability and consequentially improved their bottom line. It also exposed Apple to supplier issues. Strong demand for products like iPhone 4 and iPad 2 – the tablet still lists a 2-3 week wait time for online orders – isn’t exactly helping either, although I bet many competitors would kill for such worries.